What is the COE Singapore system ?
In Japan , to own a car , one needs to provide a Parking Space certificate . If you don’t have one then you will need to find someone who is willing to rent out a parking to you within 2km radius of where you lived . Parking Space certificate is not needed in some rural areas in Japan
COE Singapore | Singapore’s solution to congestion
In Singapore however , to cope with road congestion in this land scarce island and to curb road usage , the Singapore Government introduced 2 very important programs , the Certificate Of Entitlement or COE for short , in May 1990 and Electronic Road Pricing (ERP) . Just like many big cities around the world , it is relatively easy to grow the car population simply put too much strains on the slower land transportation infrastructure growth . Infrastructure growth just cannot cope with the relatively easy growth in car population leading to heavy traffic congestion in major cities
The COE Singapore system is designed to limit car ownership and therefore the number of cars on the roads . It is a bidding system where the folks will have to bid for the rights to buy a motor vehicle with a deliberately controlled number of certificates (through Vehicle Quota System) issued . Bidding is done on the 1st and 3rd Monday of every month . COE Singapore system for car (Cat A & B) and motorcycle (Cat D) must be made in the name of the buyer and once COE is obtained , must be registered to the name of the bidder . These COEs are non-transferable . To provide flexibility, successful COE bids in the Cat C (Goods vehicles and Buses) and Cat E (Open Category) in the name of the individuals are transferable. However these can only be transferred once within the first 3 months, while successful bids by companies are not transferable at all.
COE Singapore | Types and Categories
Here is a table of the various categories of the COE Singapore system
The COE Singapore system only allows the “owner” to own a vehicle for a period of 10 years , after which they have 2 options
Option # 1 . De-register the car for scrap or export their cars with financial incentives . As Singapore cars are all right hand drive , they can only be exported to countries with right-hand drive cars . This has caused Singapore to be one of the largest exporter of used cars to such countries after Japan (Japan is also right-hand drive) . However , the good news is that most cars on the roads are relatively “new” , as they are less than 10 years old , with good safety features incorporated into the cars
Option # 2 . Bid for another COE at the prevailing rate if they wish to continue using the existing car for another 5 or 10 years , after which , it cannot be allowed to continue anymore
In early October 2011, Singapore Minister for Transport Lui Tuck Yew has said that Singapore’s annual vehicle growth cap would be cut further from 2012. The annual vehicle population growth rate will be lowered from the current 1.5% to 1.0% in 2012, and then to 0.5% in 2013 and 2014. The lower vehicle growth rate will be more closely aligned to the pace of road growth going forward.
COE Singapore | Critics
Though the COE Singapore system has served Singapore well in reducing road congestion , it is not without problems. There is no system that is problem free . There is no ONE system that fits all .
The first problem is the stability of the COE price . It can fluctuate a great deal like a stock market . The price of COE is market driven and it can cost even higher than that of a physical car . Let’s review what it takes for a dealer to bring or import a car into Singapore and also the recent COE in march 2012 . These are the taxes and charges that needs to be incurred
Let’s assume we needed a Mercedes Benz C200 Blue Efficiency . This is Cat B COE at SGD$79304.00 in March 2012 . Let’s also assume that this vehicle is retailing at SGD$216,888.00
For the dealer who imports this car , there are others charges not included such as storage , salesman incentives , additional accessories (such as car stereo , alarm , RIMs , leather seats , etc) , road taxes and others . So one can actually determine how much the dealer would profit from the sales . Notice how much the car cost and its associated COE .
The bidding for the COE Singapore system tend to favour the wealthy as they can afford to bid for higher prices to secure the COEs . Some may even afford a few COEs for multiple cars while a lower income group who may need a car more are required to bid for higher prices as they are demand and market driven . So the COE Singapore system does not look into the “need” factor of vehicle ownership , such as a businessmen who needs a car for business purposes in which case , the car becomes a critical part or component of his business model
Having high COE prices discourages growth of a business , especially those in vehicular transport, although land transport costs typically form only a small component (about 1.5%) of business costs for manufacturing companies in Singapore. COE has an almost immediate impact on transportation businesses which have a fleet of vehicles. With a 10 year expiry of vehicles , COE system also discourages growth markets such as accessories for cars and car restoration projects.
Despite all this , overall the COE Singapore system has served its purpose well in curbing road congestion .